Navigating the world of government contracting can be daunting for small businesses, but Small Business Set Aside Contracts offer a unique opportunity to level the playing field. These contracts are specifically reserved for small businesses, ensuring they have a fair shot at winning government projects and fostering growth.
Understanding the essentials of these set-asides can open doors to new revenue streams and long-term success. Here’s what you need to know to get started and how we can help you take your first steps as a government contractor.
What Is A Small Business Set Aside?
The United States federal government purchases all of its goods and services from the private sector via government contracts. Every year, billions of dollars in government contracting jobs are awarded to businesses of all sizes. However, some fed contracts are set aside specifically for small businesses, and these are known as small business set aside contracts, or, more informally, simply as set-asides.
Types Of Small Business Set Aside Contracts
The Small Business Administration (SBA) is the federal agency tasked with managing all set-aside contracting programs. There are set-asides available for general small businesses that meet SBA size standards, but there are also some very specific set-aside programs, including:
- Woman-Owned Small Business (WOSB) Program
For this program, you must first qualify as a small business according to SBA size standards. Additionally, your company must be 51% (or more) owned by a woman who is a U.S. citizen. About 5% of all contracting dollars are dedicated to the WOSB program.
The woman or women who own the business also must manage the day-to-day operations and be able to make long-term decisions for the company. This is to prevent a scenario such as a husband who runs a business and handles the day-to-day, from simply signing over 51% to his wife to become eligible for small business set aside contracts.
This program also includes a subset known as the Economically Disadvantaged Women-Owned Small Business (EDWOSB) Program. For this program, you must meet all of the WOSB requirements and also be owned or controlled by a woman (or women) who each have a personal net worth of less than $850,000. You also cannot have more than $6.5 million in assets or an adjusted gross income of more than $400,000 over the course of the three years before signing up for the EDWOSB program.
- Service-Disabled Veteran-Owned Small Business (SDVOSB) Program
As the name suggests, this program was created to boost the profitability of businesses at least 51% owned and operated by veterans who are disabled due to injuries incurred while serving their country. About 3% of all contracting dollars are dedicated to participants in the SDVOSB program.
- HUBZone Program
If your business is located in a Historically Underutilized Business Zone – HUBZone, you may be able to participate in this small business program. HUBZones are found throughout the country. For instance, many small rural communities are in HUBZones, as well as historically impoverished urban neighborhoods. About 3% of all federal contracting dollars are set aside for HUBZone participants.
Native American lands are all HUBZones. Areas that have been damaged severely due to a natural disaster also sometimes qualify for several years as HUBZones as the government seeks to try and rebuild the area. If your business is located in a HUBZone and the majority of your employees also live in HUBZones, you may be eligible for HUBZone certification.
- Small Disadvantaged Business
While a general small business may qualify for some set-aside contracts, there is also a designation for a small, disadvantaged business. This is a business that is 51% or more owned by an individual or individuals that is part of a historically disadvantaged group. This could be a historically socially disadvantaged person or historically economically disadvantaged.
According to the federal government, socially disadvantaged individuals are “those who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities. The social disadvantage must stem from circumstances beyond their control.”
- 8(a) Business Development Program
This is yet another small business program managed by the SBA. The 8(a) Business Development Program is a federal initiative designed to help small, disadvantaged businesses compete in the marketplace and access the economic mainstream. Here are the key points about the program:
The program is open to small businesses that are at least 51% owned and controlled by socially and economically disadvantaged individuals. These individuals must also demonstrate good character and potential for success.
Program Benefits:
- Mentorship: Access to a mentor-protégé program where more experienced companies provide guidance.
- Sole-Source Contracts: Eligibility for certain federal contracts without competitive bidding.
- Business Development Assistance: Training, technical assistance, and other resources to help businesses grow.
- Networking Opportunities: Connections to procurement and marketing leads, as well as networking events.
- Duration: The program is designed to last for nine years, divided into a four-year developmental stage and a five-year transition stage.
- Support Services: Assistance with developing a business plan, marketing assistance, and training in various business areas.
Does Your Business Meet SBA Size Standards?
When we think of small businesses, we often think of storefronts with just a handful of employees, but many larger businesses will qualify as small by SBA standards. Even if you have dozens of employees, you may be considered a small business. You can check to see if your business meets the small business size standard here at https://www.sba.gov/size-standards/index.html.
Keep in mind, that to check your company’s eligibility, you will need to use your North American Industry Classification System (NAICS) codes. These codes describe the goods and services that your company can provide. You can find your codes by searching the NAICS handbook at Census.gov.
All Contractors Must Complete SAM Registration
Whether you have one employee or hundreds, any business owner who wishes to bid on government contractor jobs must first complete their registration in the System for Award Management (SAM). This is the central database that lists all government contracts, and you must have an active SAM account to be eligible for government contracting.
If you want to do business with the federal government, SAM registration is the first step. Unfortunately, it’s also one of the most difficult and time-consuming steps you have to take. The government does not charge a fee for SAM registration, but it can take 10 or more hours to complete and it’s a complicated process filled with government-speak.
Many business owners simply hire a third-party SAM registration service to complete the process for them, just as you would hire an accountant to handle your taxes. At Federal Contractor Registry, we can provide you with expert SAM registration and SAM renewal services, and our fee includes many additional items that other registration services do not provide, including:
- 100% Accurate SAM Registration
- We help you procure the new SAM Unique Entity Identifier, or UEI number
- We can help with the SAM notarized letter requirement
- We can help you with SBA registration (and determine which small business set aside matches your business)
- We introduce Super 8a Contractors to other Federal Contractors in our Network
Get Started With Government Contracting!
At Federal Contractor Registry, we can help you with fast and accurate SAM registration as well as help you sign up with the SBA. Our SAM registration experts can determine which small business set aside applies to your business and get you started on your path toward bidding on and winning government contracting jobs. To get started, just click on the green New Registration tab on our homepage and fill out our quick contact form.